New Trump Rules Pare Back Obama's Opening to Cuba -- 3rd Update

By Felicia Schwartz and Louise Radnofsky Features Dow Jones Newswires

The Trump administration on Wednesday continued to pare back rules intended to normalize ties with Cuba, announcing new regulations tightening travel and financial transactions by Americans.

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President Donald Trump had said in June he would reverse steps taken by predecessor Barack Obama to relax a decades-old U.S. embargo against the Castro regime, as Mr. Trump had pledged on the campaign trail.

The regulatory changes unveiled by the Treasury, State and Commerce departments are to take effect Thursday. While they will have an impact on the ability of individuals to travel to Cuba and curtail some business interactions, however, much of Mr. Obama's program will remain in place.

"It wasn't a full reversal, but it's not great news for American travelers and, as a resulting byproduct, this hurts the Cuban private sector," said James Williams, president of pro-normalization group Engage Cuba.

He added that the shift will make it harder for American businesses to operate in Cuba. "It doesn't fully close the door, but it's a step backwards."

Many Americans who want to visit Cuba will have to do so by traveling through tour operators subject to U.S. jurisdiction and be accompanied by a representative of a sponsoring organization that is also subject to U.S. jurisdiction.

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Most individual travel will no longer be allowed, except in cases where a flight or accommodation had been booked before June, because the Trump administration eliminated a category of travel created under the Obama administration that essentially allowed for tourist travel.

Similarly, commercial and business transactions arranged before the regulations are published on Thursday will be allowed to continue, administration officials said.

But the administration posted a list of entities connected with the Cuban military, and Americans would be forbidden from engaging in some financial transactions in the future with them.

Individual travelers still will be allowed to go to Cuba under a category that allows for travel in support of the Cuban people, but officials said travelers in that category will be subject to stricter regulatory enforcement.

The tightening comes amid heightened tensions between Washington and Havana, as officials investigate health problems suffered by at least 24 American officials and family members at the U.S. embassy in Havana, with symptoms including dizziness, hearing loss, and mild traumatic brain injury. U.S. officials have blamed the symptoms on an undefined attack, possibly one using a sonic device.

Officials said Wednesday that the rules changes were not connected to the continuing investigation into the illnesses in Havana. Mr. Trump announced the policy shift in June, before the Trump administration disclosed the illnesses in August.

"We have strengthened our Cuba policies to channel economic activity away from the Cuban military and to encourage the government to move toward greater political and economic freedom for the Cuban people," Treasury Secretary Steven Mnuchin said.

The U.S.-Cuban opening under Mr. Obama allowed several American companies to begin making inroads into travel, telecommunications and other sectors of the Cuban economy, including several hotel deals.

The new rules will prevent Americans from staying at more than 80 hotels in Cuba, but exclude from that ban the Four Points Sheraton in Havana, which is owned by a firm tied to Cuba's military, though managed by Starwood Hotels & Resorts Worldwide Inc., which is owned by Marriott International Inc.

The list bans Americans from staying at other hotels owned by the same Cuban firm, including some operated by foreign competitors.

An administration official said that the Trump administration determined it was not in U.S. interests to penalize the American-operated hotel.

A Marriott spokeswoman said the company is aware of the policy changes and is reviewing the adjustments to see if they will affect contracts and business relationships.

American farm equipment firms Deere & Co. and Caterpillar Inc. both recently announced deals to begin distributing equipment in Cuba, and they should proceed as planned. Deere & Co. didn't immediately respond to a request for comment.

Caterpillar's equipment will be distributed through a Puerto Rican-based dealership, Rimco Inc., which will set up shop in the Mariel Special Economic Development zone, an area outside of Havana aimed at attracting investment from foreign companies. Mariel is included on the prohibited entities list, but U.S. officials said the changes wouldn't affect companies already doing deals with prohibited entities.

Caterpillar declined to comment and directed inquiries to Rimco, which did not immediately respond to questions.

Write to Felicia Schwartz at Felicia.Schwartz@wsj.com and Louise Radnofsky at louise.radnofsky@wsj.com

WASHINGTON -- The Trump administration on Wednesday continued to pare back rules intended to normalize ties with Cuba, announcing new regulations tightening travel and financial transactions by Americans.

President Donald Trump had said in June he would reverse steps taken by predecessor Barack Obama to relax a decades-old U.S. embargo against the Castro regime, as Mr. Trump had pledged on the campaign trail.

The regulatory changes unveiled by the Treasury, State and Commerce departments are to take effect Thursday. While they will have an impact on the ability of individuals to travel to Cuba and curtail some business interactions, however, much of Mr. Obama's program will remain in place.

"It wasn't a full reversal, but it's not great news for American travelers and, as a resulting byproduct, this hurts the Cuban private sector," said James Williams, president of pro-normalization group Engage Cuba.

He added that the shift will make it harder for American businesses to operate in Cuba. "It doesn't fully close the door, but it's a step backwards."

Many Americans who want to visit Cuba will have to do so by traveling through tour operators subject to U.S. jurisdiction and be accompanied by a representative of a sponsoring organization that is also subject to U.S. jurisdiction.

Most individual travel will no longer be allowed, except in cases where a flight or accommodation had been booked before June, because the Trump administration eliminated a category of travel created under the Obama administration that essentially allowed for tourist travel.

Similarly, commercial and business transactions arranged before the regulations are published on Thursday will be allowed to continue, administration officials said.

But the administration posted a list of entities connected with the Cuban military, and Americans would be forbidden from engaging in some financial transactions in the future with them.

Individual travelers still will be allowed to go to Cuba under a category that allows for travel in support of the Cuban people, but officials said travelers in that category will be subject to stricter regulatory enforcement.

The tightening comes amid heightened tensions between Washington and Havana, as officials investigate health problems suffered by at least 24 American officials and family members at the U.S. embassy in Havana, with symptoms including dizziness, hearing loss, and mild traumatic brain injury. U.S. officials have blamed the symptoms on an undefined attack, possibly one using a sonic device.

Officials said Wednesday that the rules changes were not connected to the continuing investigation into the illnesses in Havana. Mr. Trump announced the policy shift in June, before the Trump administration disclosed the illnesses in August.

"We have strengthened our Cuba policies to channel economic activity away from the Cuban military and to encourage the government to move toward greater political and economic freedom for the Cuban people," Treasury Secretary Steven Mnuchin said.

The U.S.-Cuban opening under Mr. Obama allowed several American companies to begin making inroads into travel, telecommunications and other sectors of the Cuban economy, including several hotel deals.

Industry groups faulted the move for limiting American engagement on the island, though some found bright spots.

"We are encouraged that the administration took steps to limit disruption to preexisting commercial activities, ensuring that U.S. companies can continue to do business with Cuba's nascent private sector. We urge the administration to continue to keep business in mind and avoid further steps to restrict the economic relationship between the U.S. and Cuba," said Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce.

The new rules will prevent Americans from staying at more than 80 hotels in Cuba, but exclude from that ban the Four Points Sheraton in Havana, which is owned by a firm tied to Cuba's military, though managed by Starwood Hotels & Resorts Worldwide Inc., which is owned by Marriott International Inc.

The list bans Americans from staying at other hotels owned by the same Cuban firm, including some operated by foreign competitors.

An administration official said that the Trump administration determined it was not in U.S. interests to penalize the American-operated hotel.

A Marriott spokeswoman said the company is aware of the policy changes and is reviewing the adjustments to see if they will affect contracts and business relationships.

American farm equipment firms Deere & Co. and Caterpillar Inc. both recently announced deals to begin distributing equipment in Cuba, and they should proceed as planned. Deere & Co. didn't immediately respond to a request for comment.

Caterpillar's equipment will be distributed through a Puerto Rican-based dealership, Rimco Inc., which will set up shop in the Mariel Special Economic Development zone, an area outside of Havana aimed at attracting investment from foreign companies. Mariel is included on the prohibited entities list, but U.S. officials said the changes wouldn't affect companies already doing deals with prohibited entities.

Caterpillar declined to comment and directed inquiries to Rimco, which did not immediately respond to questions.

Write to Felicia Schwartz at Felicia.Schwartz@wsj.com and Louise Radnofsky at louise.radnofsky@wsj.com

(END) Dow Jones Newswires

November 08, 2017 18:44 ET (23:44 GMT)